After the Bell: Grains, Soybeans Fall on Weather, Demand Concens

Posted on 07/22/2019 2:27 PM

Corn: Corn futures got off to a firmer start overnight, but buying interest was short-lived. Futures spent much of the day under pressure and the market settled low-range and down 7 ½ to 9 cents.  A less threatening weather pattern has the corn market under pressure to start the week. Weekend rains helped to blunt the impact of heat across much of the Midwest and rains are falling today in the eastern Corn Belt. Cooler weather is likely this week, limiting concern about the forecast for just light, spotty rains the next two weeks. Of course, the long, wet spring means crop concerns remain close at hand. But immediate threats to production have faded for the time being. News on the demand front also gave traders little reason to be buyers. Exports continue to lag what’s needed to reach USDA’s export forecast as the 2018-19 marketing year winds down. Corn export inspections of 438,045 MT the week ending July 18 fell short of expectations, roughly a third of what was shipped last year at this time.

Soybeans:  Soybeans and soy product futures closed lower, setting new session lows late in the day. November beans fell 13 1/2cents to close at $9.05 3/4. Soybean meal futures were down$2.80 to $3.10 and soybean oil fell 35 to 39 points. Soybean futures started higher overnight on indications China may begin purchasing additional quantities of U.S farm goods but could not hold the early advance and fell throughout the session. Some Chinese companies have started price inquiries on agricultural products from U.S. exporters, the official Xinhua News Agency reported.  However, China officials have demanded the U.S. drop their demand to limit Huawei technology from the U.S. markets. The Chinese company, currently on a U.S. blacklist because of national security concerns, secretly helped North Korea build and maintain its commercial wireless network, the Washington Post reported on Monday.Country movement corn of and soybeans was slow on Monday morning as futures prices on the Chicago Board of Trade declined. Growers are holding onto hopes that a U.S.-China trade agreement would lift futures prices. Rumors that China may be preparing to make large U.S. crop purchases boosted prices on Friday, but no sales have been confirmed.   

Wheat:  The wheat market was led lower by SRW futures, which dropped 13 to 15 cents in most contracts. HRW futures finished around 11 cents lower and spring wheat dropped 5 to 8 cents. Wheat futures were initially pressured by selling in the corn market. But as the day progressed, seller interest in the wheat market intensified and futures finished low-range. That sets the stage for followthrough selling Tuesday. But if followthrough selling is light, a corrective rebound is possible. Seasonal pressure continues to weigh on the market as winter wheat harvest is progressing. The potential size of the spring wheat crop should come into clearer focus this week as the Wheat Quality Council is conducting its HRS tour through North Dakota, far northern South Dakota and far western Minnesota. Scouts will be in fields pulling samples Tuesday through Thursday. Weekly export inspections were uninspiring this morning. While the inspections pace is 27.5% ahead of last year, the inspections pace was poor in 2018-19. Many of the major exporting countries, including the Black Sea region have plentiful supplies and are willing to undercut the U.S. on price.  

Cotton:  December cotton closed up 29 points at 63.36 cents today, but nearer the session low.  More short covering was featured in the futures market today, following last week’s move to a new contract low. Other positive element for the cotton market bulls early this week include the latest CFTC commitment of traders report showing the big speculative funds in the cotton futures market are presently holding record net-short positions. Those short positions are going to have to be offset by the funds at some point, and that can be read as bullish just down the road. Also, the recent slump in the cotton futures market may have pushed prices low enough to generate some better demand for U.S. cotton on the world market. On the U.S.-China trade front, some Chinese companies have started price inquiries on agricultural products from U.S. exporters, the official Xinhua News Agency has reported.   

Hogs: Hog futures ended mixed, with August under pressure and its premium to cash limiting new buying; the deferreds continue to build on three solid weeks of advances. August closed down 65 cents at $83.225 while October and December both gained 27.5 cents. Deferred futures gained on Chinese-buying ideas. Some Chinese companies have started price inquiries on agricultural products from U.S. exporters, the official Xinhua News Agency reported. The Chinese companies are willing to import some agricultural products from the U.S. to meet domestic demand, according to Xinhua.  Pork needs will be strong with the African swine fever outbreak curbing production into at least 2020 despite the government saying the disease is under control. Much of the underlying strength in cash and futures today stems from slowing slaughter.  

Cattle:  August live cattle futures closed up 85 cents and the October contract gained 65 cents. August feeder cattle futures rose $2.20 on the day. All contracts finished near their daily highs. Cattle futures markets saw some chart-based buying interest today as bulls are working to re-establish price uptrends on the daily bar charts. Friday afternoon’s USDA Cattle on Feed Report came in right about as expected and the biannual cattle Inventory Report showed the market is likely working on a cyclical peak for supplies. While that’s price-positive, the report did show increases versus year-ago levels for other heifers and steer numbers. Another report is slated for release after the market closes today is USDA’s monthly Cold Storage Report. Recent releases have reflected impressive beef demand.


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